13 surprises for '13

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In the seasonal habit of the annual forecast, we too often end up with a consensus view – knowing full well that one thing is certain: Every year brings us those unexpected trends.

As we soak up the holiday spirit and prep for a fresh year, I
wanted some business outlooks that might, yes, surprise. So I asked business leaders around the county what surprising economic signals they're keeping an eye on and which trends might amaze us in the coming year.

You know, tell me things that the gurus are not talking about – yet.

So here's
what I unearthed,
my collection of 13 business surprises for 2013:

1. BUYING BETTER BRANDS

Ron Schwartz, owner and operator of Muldoon's Irish Pub in Newport Beach, keeps an eye not just on his restaurant's sales totals – but also watches for surprising changes in how customers are spending their money: “Guests show their optimism about the coming year in a number of ways. For example, we see more guests requesting a Bushmills 16-year or 21-year-old Irish Whiskey in lieu of a basic, acceptable Irish Whiskey.”

2. MENSWEAR

When Dan Sheridan, who heads the Irvine Co.'s retail properties division, wants to see a serious turn in the shopping climate, he keeps his eye on a less-than-hyped slice of the shopping spectrum: “When we see an increase in the sales of retailers focused on men – apparel or accessories – that is a sign of improving economic times.”

3. EXPERIMENTATION

Good times, bold thinking. Take Greg Daniels, executive chef and partner of Haven Gastropub in Orange. He, too watches what's being ordered by his customers: “When people try new things, it tends to make me think that the economy is allowing them to be a little more adventurous, and more willing to take chances. When times are tough, people eat where they know, and what they know.” He thinks that will translate, too, to where people eat: “I think the growth in Orange County's restaurant scene will continue to surprise us, and hopefully start changing the way we look at food. The more progressive concepts, with real food, and real chefs at the helm, will force people out of (big chains) and into independently owned restaurants.”

4. WAL-MART GROWS

Tricia Esser, CEO of the architects at Irvine's KTGY Group, offered a modest surprise for the year about home construction (“Builders are back, single family is selling again, the new innovative floor plans are all the rage!”) and a whopper of sheer speculation for grocery shoppers: “Wal-Mart buys all Fresh and Easy stores and turns them into Neighborhood markets – purely speculation on our part, no real basis for this one!” If you didn't hear, all Fresh & Easy markets are up for sale just as Wal-Mart is increasing its local grocery-store push.

5. TAX BITE

Adam Spice, the CFO at semiconductor maker MaxLinear from Irvine, thinks the 2013 surprise will be how taxes hit the business climate: “The velocity and trickle down impact of increased taxes on federal and state levels. The impact of current populist economic policies will come home to roost, as top earners spend less, which unfortunately will end up being even more punitive on lower-income participants in the economy.”

6. SMARTPHONE GROWTH

It's not earth-shattering that smartphones are popular, but the speed of that growth will stun many people. Terri Timberman, executive vice president for global human resources at communication technology giant Broadcom in Irvine, notes the company estimates that 99.98 percent of Internet traffic touches a Broadcom chip. That's not a bad market presence in a trade where the hot product – smartphones – expects 33 percent growth in sales in 2013. By 2020, it's expected there will be 50 billion connected gadgets worldwide – or six for every person on the planet.

7. PRICIER MORTGAGES

The continuation of cheap money – such as record-low mortgage rates – was a surprise for 2012. Trent D. Brooks, chief operating officer at apartment owner Lyon Communities, suggests that a year from now we could be talking about how that bonus for homebuying ended so soon: “Mortgage interest rates are going to rise faster and higher than people predict right now. This will partially accelerate the paradigm shift away from homeownership.”

8. FORECLOSURE REBOUND

The pace of troubled home loans slowed in 2012 as the economy improved and lenders either found other solutions or put off some home seizures. Daren Blomquist, vice president at mortgage tracker RealtyTrac, won't be surprised if that trend changes direction after the start next month of the California Homeowner's Bill of Rights. It makes it harder for lenders to foreclose without giving borrowers a clear shot at reworking their troubled loans. He thinks it's possible to see a late 2013 foreclosure jump that “won't be a sign the market is tanking once again – but simply a last, dying gasp of this most recent foreclosure crisis. It will cause irrational concern among some, but actually it will provide one of the best chances next year for buyers and investors to jump in and find good deals before the market really takes off in 2014 and beyond.”

9. LENDING IS CHIC

Orange County has long been a hotbed of lending, especially high-volume mortgage making. Well, that didn't end so well in the middle of the last decade – whether for the lenders themselves, or the landlords who rented them space. Jeff Ingham, who follows local commercial real estate as a senior managing director at Jones Lang LaSalle, says the surprise could be back to the future with a rebooming home-loan industry: “Despite the tenant diversification that has taken place (in local office space) over the past four years, Orange County will once again be (an office) market consumed by the mortgage industry.”

10. HOTEL BOOM

One big 2012 surprise was the rapid rebound in the hotel business. It was a reversal that wasn't seen coming by Alan Reay, president of the Atlas Hospitality Group consultancy. And his surprise for 2013 will be this turnabout's speed. “Record real estate prices!” he says. “It will be 2006/2007 all over again.”

11. MORE CUSTOMER INFO

What to do with information overload? Tom Johns, vice president of business development at Envelopments in Santa Ana, says you'll be surprised in 2013 with the further increased speed of that data flow. “The availability of information about what's happening in the world, data about your business, your customers' behaviors and experiences is almost overwhelming and unlimited. The ability to ‘hear' that information and decide what to do with it will become even more critical. To successfully manage change at a much more rapid pace determines the winners and losers in any economy – especially the changing one we live in now.”

12. QUIET TIME

In an age of quick thinking, Rob O'Connell surprisingly suggests more reflection and planning. The vice president of California sales at Total Wine & More from Huntington Beach says that's what he'll preach next year: “I plan to continue to teach/coach/train our managers to take the time they need to plan, prioritize and organize themselves so they can be effective leaders of their stores, districts and regions. We all need some personal time each week to sit down and organize ourselves for the upcoming week.”

13. THE BIG ONE

Jim Palmer, president of the Orange County Rescue Mission, had some fun with our query, saying: “Let's see … what ‘might' be a big surprise is that the state of California will balance its budget and reduce taxes across the board (did I say NEVER going to happen?) That is not going to happen. What is more likely to occur is the ‘Big' one – as in, the great California earthquake or, maybe, more inventory of affordable housing.”

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